Nation's largest retailer (Walmart) to help sell the priciest product we buy (cars)

January 25, 2017

America's decades-old dealership model has been under attack lately. The best example of comes courtesy of Tesla, which now sells its electric vehicles directly to consumers, both online and in showrooms. To do that, Tesla has fought against dealer networks and longstanding state franchise laws.

Now, another offensive has been launched--one that could have a much bigger effect on traditional dealerships because it's centered around America's biggest retailer, Walmart. This week, we learned that the massive, big-box chain store will begin selling both new and used cars, in partnership with the online service CarSaver.  

Beginning this spring, Walmart will install "CarSaver Centers" at Supercenter locations, alongside the eyeglass shops and banks already positioned across from the store's checkout lanes. The Centers will feature touchscreen kiosks that allow shoppers to search for both new and used vehicles from CarSaver's network of dealers.

Once they've found the right ride, shoppers can apply for financing and set up insurance on the same touchscreen, just as they can on the CarSaver website. Multi-lingual staff will be on hand to help guide consumers through the process. 

Afterward, shoppers will be directed to a local dealership to sign the necessary paperwork and pick up their vehicle. CarSaver will receive a $350 "success fee" for completed sales. 

The program was piloted in Florida last April. On April 1 of this year, it's expected to debut in 25 Walmart Supercenters in four key markets--Dallas, Houston, Oklahoma City, and Phoenix. There's no word on when it will roll out to Walmart Supercenters in other parts of the country, though CarSaver hopes that'll occur by the end of 2018.

Similar programs have been in place at one of Walmart's major competitors, Costco, for years. Costco sells roughly 1,000 new vehicles per store each year. Walmart is aiming to do roughly the same number at each of its Supercenters, though that figure will include both new and used vehicles. 

Our take

Walmart hasn't commented on this news, and it probably won't for a while. However, if the early reports are accurate, this could be a real game-changer--a win-win-win for Walmart, CarSaver, and consumers.

Walmart might not derive any money from individual auto sales, but it will almost certainly earn some revenue from CarSaver, which will be setting up shop in Walmart stores. The company will also benefit from additional foot traffic, and its portfolio of offerings will be expanded, which will likely improve its brand a bit.

CarSaver obviously benefits from increased visibility and the opportunity to generate additional revenue--not only from sales in Walmart stores, but also from sales on its website. Given the competitiveness of the online auto sales segment, that's huge. 

And consumers stand to win because the car-buying process will be simplified. It's been shown time and again that shoppers hate haggling, and they're uncomfortable with the complexity of auto sales. This arrangement makes the process more streamlined and straightforward. 

Even dealers stand to win from this set-up--at least those that belong to the CarSaver network--because they'll have access to larger numbers of shoppers. In fact, the only group that may lose is sales staff, whose role will continue to be minimized. 

Have you ever bought a car using a program like this? Would you? Share your thoughts in the comments below.

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